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The aluminium futures contract on the Multi Commodity Exchange (MCX) has been in a gradual decline over the last couple of weeks. The MCX Aluminium December futures contract opened the week on a weak note and is down 0.8 per cent. The contract, currently trading at ₹205 per kg, has drifted down from a high of ₹215 over the last couple of weeks.
Outlook
The fall below ₹206 today leaves the outlook negative for the contract. As long as it trades below ₹206, the chances for it to fall further towards ₹203.5 and even ₹200 this week are high. The region between ₹200 and ₹199 is a strong support. As such, there is a good chance that the MCX Aluminium contract will bounce-back from this support zone.
A strong and sustained rise past ₹206 is needed to ease the downside pressure and turn the outlook positive for a rise to ₹213 and ₹215 once again.
As seen from the price action in the charts, the bias is negative, and the preference will be for a fall to ₹203.5 and ₹200.
Trading strategy
Traders can go short at current levels. Keep the stop-loss at ₹207. Trail the stop-loss down to ₹204 when the contract falls to ₹203.8. Move the stop-loss down further to ₹203 when the contract touches ₹202.2 on the downside. Book profits at ₹201.
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